Welfare recipients get $12,000 from strip club ATMs

Gov. Schwarzenegger orders the California Department of Social Services to remove the clubs from a list of businesses approved for state-issued cards.

Reporting from Sacramento — California welfare recipients have been able to get taxpayer cash — meant to feed and clothe their children — from ATMs at strip clubs across the state, including some well-known gentlemen's cabarets in Los Angeles.

More than $12,000 from the Temporary Assistance for Needy Families program was dispensed between the start of 2007 and the end of 2009 at clubs, including Sam's Hofbrau, Star Strip and Seventh Veil, according to officials at the state Department of Social Services.

Gov. Arnold Schwarzenegger has ordered the department to remove the clubs from the official list of businesses where welfare recipients can withdraw benefits using state-issued ATM cards.

The move came a day after The Times asked the administration how much welfare cash had been withdrawn at 17 adult clubs in recent years, and less than a week after The Times reported that more than half the casinos and state-licensed poker rooms in California appear on the state website showing welfare recipients where they can access cash benefits.

After that report, Schwarzenegger ordered the casinos struck from the state's ATM network and directed the Department of Social Services to produce a plan to reduce "waste, fraud and abuse" in the welfare program.

"We'll take a wide-ranging look and apply some common sense to the list of outlets where cash assistance should not be withdrawn," Department of Social Services spokeswoman Lizelda Lopez wrote in an e-mail to The Times on Tuesday evening, announcing that her department had "taken steps to deactivate ATMs in adult entertainment clubs."

Strip club managers seemed shocked that welfare benefits have been accessible through their ATMs. In most cases the machines are provided by a third party, the managers said, and they have no way of knowing their ATMs are part of the state system.

The state contracts with the Quest ATM network.

"If there's a way that the ATM can reject their card if they're on welfare, I'm really and truly all for that," said Merle Matias, manager at Sam's Hofbrau in downtown Los Angeles, where $2,159 has been withdrawn, according to Department of Social Services officials. "I don't think it will affect us at all."

Star Strip manager Joey Mancini said state officials must be wrong about the $1,265 they said has been withdrawn from his club's ATM. The Quest symbol isn't on the machine, he said, adding that he thinks any system that allows access to welfare benefits at a strip club should be reformed.

"This is not what that money is for," he said.

A manger at Seventh Veil declined to comment.

Nearly $4.8 million has been withdrawn from ATMs at casinos and poker rooms with welfare benefits cards from 2007 through last month, state officials said last week. The vast majority of that, $4.4 million, was withdrawn at tribal casinos.

"This is a huge amount of money when we're slashing programs right and left," said Assemblywoman Noreen Evans (D-Santa Rosa), who added that the Schwarzenegger administration should have caught the problem years ago.

In May, Schwarzenegger proposed eliminating the CalWorks program, which provides the cash portion of welfare benefits, as part of his plan to close the state's $19-billion budget deficit.

Advocates for the poor say that it would be unconscionable to cut any more from the state's already shrinking social safety net, arguing that there are good reasons to preserve access to cash benefits even at gambling establishments.

"Casinos in some rural places have become like little hubs of the community," said Michael Herald, a lobbyist for the Western Center on Law and Poverty. "My guess is there's a small contingent of CalWorks recipients who work at, or live near, these casinos."